Making sure you staff efficiently is critical. In this e-book, we give you a way of thinking that will help you figure out how many customer success managers you should have for each customer.
3. According to British anthropologist
Robin Dunbar, the ceiling on human
capacity for stable social relationships
hovers between 100 for the more
introverted and 250 for the more
outgoing, though 150 is the most
commonly quoted. (It’s called
Dunbar’s number).
4. If you just thought about how many
Facebook friends you have, note that
Dunbar’s number applies only to people
you’d consider inviting to a dinner party.
So probably not that guy you’re pretty
sure you knew in high school.
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5. With this in mind, here’s a quick
mental exercise: decide how
many family members you’d
put in that group, and then how
many friends.
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6. Add work friends to that number --
the ones you gossip with over drinks.
Go ahead and add your dog, too.
She’s cooler than most of your friends
anyway.
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7. Add clients or your
equivalent; journalists have
sources, for instance.
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9. Technology allows us to handle more
relationships; that’s why some of us can have
thousands of Facebook friends without
feeling overwhelmed. The difference is in how
intensely you manage them.
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10. If a rep is expected to manage each of those
200 accounts closely, she has far exceeded
her relationship capacity, because those are
high touch customers. Alternatively, if 50 of
those accounts were high touch, and 150
were low touch (those Facebook friends you
keep but don't talk to much), she'd be in
good shape.
11. Of these two sorts of customers — low
touch and high touch — we’re going to
focus on the latter (those that would show
up in Dunbar's number).
Assuming your reps like their families,
have friends, and speak to their
colleagues, they probably shouldn’t be
closely managing more than 50 (or so)
accounts on top of that.
12. Note: This isn't one fits all, but it's a
good way to deduce which ratio works
for your business.
1
25
50
33
5
12
42
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13. Now we have a working ratio ceiling; no
more than 1 rep to 50 customers.
The second thing you need to keep in
mind is that ratios aren’t static.
1:50
5:30
14. Most customers experience a learning
curve at the start of using any product. In
SaaS, we often call this onboarding, or the
period after the customer has converted
when she's just starting to use the product.
Nailing this transition is critical.
15. Think of it like a luxury hotel stay. If the
resort staff nails your arrival from the
most basic standards — a clean room — to
the bells and whistles (a lei around your
neck, a bottle of champagne on ice),
they're more likely to earn your trust.
This line of thinking comes courtesy of Ed Powers,
principal consultant at Service Excellence Partners, who
has worked in both luxury travel and customer success.
16. The same goes for your company. Nail the
arrival. That means front loading your ratio —
more customer success reps to customers in
the first month of the customer relationship,
or however long onboarding takes for you.
#ofCustomer
SuccessReps
0 30 60 90
Days
17. Onboarding is usually a high-touch
relationship, which means reps managing it
will need to oversee fewer accounts at once.
Over time, that relationship becomes less
intense.
18. So for each customer, your ratio will
change over time, from more
reps/customer to fewer reps/customer.
That also means each customer
becomes less expensive.
20. Most companies need to spend 12 cents
on customer success to protect every
$1.07 in ARR, according to Pacific Crest
Securities.
21. So let's stress test the 50:1 ratio for a
company whose average account value is
$25,000.
50 x $25,000 = $1.25 million
$1.25 million x .12 = $150,000
That's a conceivable number for the fully
loaded cost of a customer success manager.
22. So use Dunbar's number as a
conceptual bar to figure out a ratio
that's good for you. And remember
to nail the arrival.
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